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University construction funds are to be frozen at DM1.8 billion (Pounds 750 million) as part of Germany's austerity drive despite huge student overcrowding.

This week's federal budget is lopping DM700 million off the 1997 budget of the ministry of education, science, research and technology. This includes a student grant budget cut from DM1.85 billion last year to DM1.557 billion.

Germany is one of the countries reprimanded by European finance ministers for of its failure to meet the stringent requirements ofEuropean Monetary Union. The government is struggling with a massive budget deficit. It intends to spend DM10.9 billion less next year.

Social services will bear the brunt of the austerity measures. But for Jurgen Ruttgers, education and research minister, it means cutting research spending by 10.6 per cent next year, hitting climate and marine research, transport, technology, laser technology, new materials and renewable energy.